Severability of the Agreement: What You Need to Know
When you enter into a contract or agreement, it is important to understand the various clauses and provisions that are included. One of the provisions that is often included in contracts is severability. Severability is the ability to remove or strike out a provision in an agreement if it is found to be illegal or unenforceable.
Severability clauses are important because they allow the rest of the agreement to remain intact and enforceable even if a particular provision is found to be invalid. This can save time and resources that would otherwise be wasted trying to renegotiate or rewrite the entire agreement.
For example, imagine that a company enters into an agreement with a vendor to purchase goods at a certain price. The agreement also includes a provision that states that the vendor will be paid a bonus if they exceed a certain sales goal. However, if the bonus provision is found to violate anti-bribery laws, a severability clause in the agreement could allow the bonus provision to be struck out while still allowing the purchase agreement to remain valid.
Severability clauses can also be beneficial in the event of a dispute between parties. If a court or arbitrator finds that a provision in an agreement is unenforceable, the rest of the agreement can still be enforced. This can help to prevent the entire agreement from being invalidated due to one problematic provision.
It is important to note that severability clauses do not guarantee that an agreement will be enforceable in its entirety. If a provision that is vital to the agreement is found to be unenforceable, the entire agreement may be voided. Additionally, if a provision is found to be illegal or against public policy, it may not be able to be saved by a severability clause.
In conclusion, severability clauses are an important provision to include in contracts and agreements. They provide a safety net to ensure that an entire agreement is not invalidated due to one problematic provision. However, it is important to understand their limitations and that they do not guarantee the enforceability of an entire agreement in all circumstances.